SAP's Ariba Buy Opens New Front in Oracle Rivalry

Software company SAP AG's deal to buy Ariba Inc opens a new front in its battle with Oracle for the internet-based cloud
computing market, raising the possibility of a counterbid from its arch rival.

Software company SAP AG's
deal to buy Ariba Inc opens a new front in
its battle with Oracle for the internet-based cloud
computing market, raising the possibility of a counterbid from
its arch rival.

SAP, Europe's biggest business software maker, announced
plans late on Tuesday to buy Ariba in a deal valuing the
business and commerce network company at $4.3 billion.

Analysts said since many of Ariba's customers use Oracle
services, there was good reason, and a precedent, to believe the
U.S.-based Oracle might make a rival bid; in 2005, Oracle
snatched retail software maker Retek away from SAP after a
bidding war that reached $630 million.

International Business Machines, the world's largest
technology services company, and e-commerce company eBay Inc
could also be possible contenders.

"You never know. We will see. We think we paid a fair price,
but you have to realize that there are few assets available in
the world such as Ariba," SAP's co-Chief Executive Bill
McDermott told journalists on Wednesday.

Though Ariba made a small loss last year, it boasts that
more than 730,000 clients, including British Airways, Chevron
and Tata Motors, use its services in activities such as
procurement, contracts and cash management.

Arch rivals Oracle and SAP are both transforming themselves
into major players in cloud computing - providing software,
storage and other services from remote data centers over the Web
- and reducing their reliance on traditional business software.

SAP announced the purchase of web-based software company
SuccessFactors Inc late last year, while in February, Oracle
agreed to buy Taleo corp, a maker of web-based software for
recruiting employees, for about $1.9 billion.

Others said SAP's rivals might baulk at spending more than
the $45 a share on offer, which was already a 20 percent premium
to Ariba's closing price on Monday.

"That premium is not exactly small. The question is whether
it is right to pay prices like that," a fund manager in Germany
said, who holds SAP shares in his portfolio and who asked not to
be named.